Wednesday, 1 February 1984

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

Mr. G. Mitchell:I was speaking earlier about the question of spongers. We have been brainwashed into believing that all these spongers come from within the social welfare group. I would condemn those within that group who are abusing the system — and there are some — but there are people in other areas who are sponging from the community. Before lunch I started to read onto the record a letter from the Federation of the Self-Employed who suggested that people who go to prison should not be properly fed and should not have television or radio. They also suggested that people should be caned. Should they also be caned who cheat on their VAT returns, who do not send in their PAYE returns or only a portion of what they have deducted? Should people who cheat on their tax returns be caned? There is a feeling abroad that the only people who are sponging are social welfare recipients but such people are on the bottom rung of society and are entitled to receive payments. There are, of course, elements [1538] who are not. I resent this smear on a section of our community by people who are well-heeled and capable of looking after their own interests. They have a double standard, expecting all the ills in our society to be corrected by getting those on the lowest rung of the ladder to take the blame and carry more of the burden. We should tell these people that they are having it good and that we expect some responsible participation by them in society. If they were to look into their own hearts and see their contribution to society, then we would see where the true spongers are.

I feel very strongly about the employment problem. It is likely that unemployment figures will rise even higher before they begin to bottom out towards the end of the year. It is not possible for the Government or for the Legislature to correct all the ills with regard to unemployment. We cannot legislate unemployment away but there is a lot we could do and I do not believe that everything possible is being done. I know that the attention of the Government has been taken up with the serious financial situation which they inherited and they have dealt with that in a very sound way to date, although there is still a lot of work to do. The question of unemployment remains very serious. Even with the improvement in industrial employment towards the end of the year we will not be able to produce sufficient jobs to reduce the unemployment figure or to meet the needs of young people coming on to the labour market. It is time to take special action in this regard.

In the UK there is a Privy Council arrangement where behind the Chair, so to speak, items of special importance, usually security matters, are discussed. Unemployment is such a serious problem that the Taoiseach and members of the Government together with the Opposition should have such a privy council type arrangement where, far from the petty bickering which takes place on the floor of the House, matters relating to unemployment should be discussed.

This problem has implications for the whole social fabric of society. It is a national problem and requires statesmanship [1539] and action to deal with it. If we stopped bickering about it and did something positive we could cut out the vested interests, employers and trade unions, and get people back to work. We could give hope to the community.

The Government have a responsibility to govern. It is not our job just to manage the affairs of the country and stop at that. We must decide where the future of the country lies. Much more could be done about the unemployment problem. I implore the Taoiseach and the Leader of the Opposition to consider setting up such a privy council to deal with matters such as the serious problem of unemployment which is threatening the community. I intend raising this formally in the House again.

Businessmen who threaten to take their money and run give free enterprise a bad name. By their callousness they are turning people towards what they say they are opposed to and that is State control. They will soon run out of places to transfer their funds to because, like it or not, we will not always have a liberal democracy. We are already under pressure to have dictatorships. The people who say they are opposed to that kind of government are lending support to the argument for it by their irresponsible actions. We are one of about 15 liberal democracies in the world. We are under threat and if we do not deal with our problems in a responsible way — that requires responsible action on the part of the people who control capital as well as labour — the world will soon be one liberal democracy less. It is time to get our act together. These people should put something back into the society which made them wealthy men.

As regards wastefulness in the public service, one of the problems we have is that there is very little incentive for people employed in the public service. There is little feeling of responsibility or of belonging to an organisation. In some of the larger local authorities and, perhaps, to some extent in central Government, engineers come in one door and shop floor workers come in a different door. They rarely meet unless they are [1540] taking instructions and so on. That type of situation does not encourage full participation by everyone. If people in a Government Department do not spend all the money voted to them they should be given a bonus as is done in the private sector. If we do not give people some incentive they will receive a budget of £X this year and will look for £X + 1 next year and so on whereas a budget of £X - 1 might suffice and would help us to save money for the PAYE sector. We should encourage good relations in general and not just good industrial relations in local authorities and the public service between management and employers. That would contribute towards eliminating waste.

One of our biggest problems is the public service pay bill. I understand that the Minister is not providing for an increase in the public service pay bill over and above what was negotiated. As a member of a VEC and a local authority I have spoken to people who have seen their colleagues retire and not be replaced. They argue they would prefer to see the same numbers employed at the same cost to the Exchequer. In other words, for the miserable saving we make on the one in three policy, which must be done, we could keep people at work if people in the public service were a little more moderate in their demands.

Much has been said about the 19 per cent pay increase Deputies received. If one takes into account the back money we did not receive it comes down to 14 per cent. Everyone in the public service received that 19 per cent, although not everyone got the back money. It is time to ask the people in the public service if they would prefer to keep the same numbers at work with the same pay bill or get an increase and let some people go. That is what it boils down to. Many people would be prepared to keep their colleagues at work because they would realise that it could be them or their son or daughter who would be let go. If there was moderation a substantial number of people could be employed.

In these difficult times people in the public service do not just have the wage agreement to which they are entitled but [1541] they have the added attraction, with some notable exceptions, of security of tenure, payment while they are ill and promotional prospects which people in outside employment do not have. It is incumbent on the public service to give the lead in these difficult times. It is all very fine to scream, “We must get this rise and that rise to keep pace with inflation”. That will mean people in the public service will continue to become unemployed, will go on to the dole queue and compete in an already overcrowded jobs market. That will not do anybody any good. There must be a rational approach towards controlling the public service employees. That could be a cornerstone in economic recovery.

I congratulate the Minister for introducing a number of imaginative items. It is a good thing to take some of the people in the lower income group out of the tax net. It is a good thing to reduce VAT on theatre tickets. It is a good thing to reduce VAT on cement. While these are not enormous steps they will give encouragement to certain sections of the community and it is a good thing to see such items included in the budget. The Minister has acted on sound and reasonable lines within the objectives he set himself. By the end of the year I hope we will find ourselves out of the dark tunnel in which we have been travelling for some time past, out of the dark tunnel into the light of economic recovery.

Mr. J. Leonard:This budget has been described in various terms from “neutral” to “as-you-were”. It is a budget that has not performed as we on this side of the House would have hoped. It has not dealt with the major ills especially from the point of view of unemployment. It is a budget that can be amply described as just kicking-to-touch without any gain in ground. When one examines it it would appear to be a step backwards. It is clear evidence of a Government who have lost their nerve. When engaged in sports, as I was a few years ago, one was always afraid that at the vital time youngsters would lose their nerve. I think the Government now have lost their nerve.

I do not propose to waste time reading [1542] extracts from promises made by various members of the Government in the last election and since in the by-election. We are all too well aware of the contents and when one now finds this wishy-washy budget put before us it makes one wonder. I believe, however, that those earlier statements by members of the Government should be compulsory reading for people to show what they proposed then and what they came up with when they had the opportunity.

Many speakers have talked about the budget as a neutral budget, as if this neutrality had some special merits. To me, a budget should not be just a book keeping operation. It should not be mere accountability of money taken in by way of taxation. It should have a direction and a purpose. It should direct how the economy should develop. While the budget of itself cannot get the economy going it should endeavour to create the conditions which can revitalise the economy. The Taoiseach appears to accept the standstill effect of the budget. He seems to be content to resume progress at another time and in another budget. The last speaker said that in the past three years we have more than doubled the EEC average where unemployment is concerned. Recently I came across figures in my own constituency. We spoke here last June on the effect of the 1983 budget on the Border regions because of the tax impositions and the damage they were doing. At that time we had 1,800 unemployed in a small county, with a small population of 51,000. We thought we were at rockbottom then, at an all-time low. We now have an average of about 100 per month and that continues.

What is needed is the creation of confidence in people in their own ability. If the Government do not show initiative it is very difficult to generate confidence. We have reached a point now where the private sector must step in to generate confidence. The volume of imports makes depressing reading. Most of those imports could be produced here quite easily. If entrepreneurs in the private sector will come together that is the only way in which we can develop our [1543] resources. Recently in a CII publication I noticed that employment in the labour intensive industries over the last four years had dropped by 20,100 people and the total engaged in manufacturing has dropped by 33.5 per cent. That gives an indication of the serious situation in which we are. There was a time when we were very adept at manufacturing footwear. Last year for the period January to October our imports of footwear reached a figure of 67.3 million. We must put greater emphasis on buying Irish and supporting home production. If we do not do that we shall reach an intolerable situation. Since 1947 competing imports have increased their share of our market from those years when we were in our infancy from the point of view of manufacturing from 40 to 70 per cent in clothing, from 50 to 70 per cent in textiles and from 18 to 30 per cent in foodstuffs. That last figure occurs at a time when the production and manufacture of processed foodstuffs have improved considerably, when there is great expertise and very competent young people coming in at management level. It is incredible, in the light of that, that processed foodstuffs should have increased by such a volume. Unfortunately that situation is continuing.

We import materials for the construction industry to the value of £400 million. Surely that figure could be reduced. Such massive importation would be considered unsatisfactory at any time but it is disastrous at a time of such high unemployment and very difficult economic conditions. I am not saying that the situation can be changed over night but such Government agencies as the IDA, Foras Forbartha, the IIRS, the educational establishments and the local authorities will have to come together to examine the question of how imports can be reduced. Up to 75 per cent of the construction materials imported are being directed to buildings that are financed either wholly or partly by the State. There will have to be some control in regard to the materials used in those buildings.

[1544] The budget highlights once again the fact that the Border area is the forgotten region, the never-never land. Much lip service is paid to the problem of under developed areas while nothing positive is being done to alleviate the situation. The wide divergence in prices as between each side of the Border is causing grave problems for traders on the Twenty-Six County side. Many of them have been forced to go out of business because of this situation. The established trading practices of that region have been destroyed. While the big differences in prices may be the subject of jokes in some places, the situation is leading to the bankruptcy of many business in the area with the consequent loss of many jobs.

The Minister chose to increase the price of petrol by 6p per gallon. I do not know whether that is inclusive of VAT. It may not be. In any case, the increase keeps us at the top of the league to the extent that petrol prices here are the highest of any of the EEC contries. There had been expectations on all sides that the Minister would make amends for what he did last year in this respect because in the meantime he has had a clear indication of the fall-off in revenue that resulted from his action and of the damage that resulted to traders in the Border region. I am talking of an area which is regarded as being severely handicapped not only in the national context but in EEC terms, a situation that was reaffirmed by the social affairs committee who visited us last summer. It is not the nature of a northerner to indulge in whinging but the people concerned are only trying to ensure that they get fair play.

Six months after the 1983 budget a delegation of traders from Counties Donegal, Leitrim, Cavan, Monaghan and Louth met the Minister for Finance on a number of occasions. I have here photostats of the submissions put by the group to the Minister. They pointed to alternatives in the system of the collection of VAT and they told the Minister that in Counties Cavan, Monaghan and Louth there was a decline, within six months of the budget, of 52 per cent in [1545] trading while in Donegal the decline was of the order of 60 per cent. These people, with the help of a team of accountants, estimated that the annual loss to the Exchequer in duty and VAT on spirits alone would amount to £14 million. They were proved to have been correct in their estimation. They gave the Minister a break-down of the various items. The variations in prices were 90 per cent in respect of lagers, 42 per cent in respect of wines, 47 per cent in respect of whiskey and 27 per cent in so far as petrol was concerned. We had hoped that in this year's budget the Minister would redress the imbalance but apparently he does not recognise the difficulties that are involved for people concerned.

In regard to the milk super-levy, the approach of the Government and of the Minister for Agriculture was marked by indecision and by a changing of positions. The super-levy negotiations left much to be desired and indicated a lack of recognition of our position vis-à-vis our partners in the EEC. This lack of recognition was particularly obvious so far as the British were concerned. The levy would create a very serious problem for the western counties in particular where farmers had changed over in previous years to milk production in the belief that it was their only hope for survival. This whole matter of a super-levy will have to be examined very carefully. We must ensure that our agricultural industry is not damaged. Of our total exports, 38 per cent relate to agriculture and of that amount 32 per cent relates to dairy products. In terms of the other EEC countries, our agricultural industry is six-and-a-half times more important to our economy than is the agricultural industry of any other member state to its economy. These figures give an idea of the necessity for the Minister to use as much muscle as possible in relation to this whole question.

At a time when so much difficulty is being experienced in manufacturing industry in terms of markets and so on, our agricultural industry, if properly developed, has the capacity to pick up the slack that pertains in many other areas. Admittedly, there is provision for [1546] £100,000 for a potato co-operative. That is welcome and one hopes that this is only a beginning in terms of our coming to grips with the question of import substitution. In reply to a question today we were told that for a period of some months in 1983 we imported vegetables worth £49 million. In these circumstances one looks forward eagerly to the establishment of food co-operatives and so on because they are the answer to our problems. There are many excellent small industries, but if agriculture is to reach its full potential we must establish food co-operatives and have regard to the market weaknesses that have caused so many problems up to now. We must ensure that our produce is of the highest standard, because if the standard is right and if our prices are competitive we should not have any problem. We must concentrate to a large extent on value-added products. It is ridiculous that so much of our produce leaves the country before being processed while the value-added content is used in other countries.

We have not been recognised sufficiently by the EEC. I read recently that a mining town in England with a population of 55,000 was given aid to the extent of £50 million to help counteract the winds of recession. We had a guarantee that subsidies for ground limestone and AI services would be continued. This is very important if we wish to upgrade the quality of our herds. In a time of recession farmers may be inclined to cut costs, such as not using the necessary application of lime and this could have serious consequences in years to come. The Farm Modernisation Scheme was withdrawn in the budget last year in order to save £10 million or £12 million and a modified version of the scheme was reintroduced in January this year. We were fighting to ensure a continuation of the market for our products and we were fighting against the super-levy but, at the same time, the Government here were withdrawing necessary development aids.

The revised scheme will apply only to development farmers and they comprise one-fifth of the farmers in my county. We have a high proportion of development [1547] farmers and we have a 99 per cent record for completions under the Western Drainage Scheme and land improvement schemes. In Monaghan there are more than 900 development farmers and there are 4,200 farmers in the other categories. When the Farm Modernisation Scheme was introduced in 1974 a farmer had six years before he was placed in the development category. If he fulfilled the criteria regarding acreage and the income per labour unit he could move into the development category or he alternatively could move into one of the other categories.

What has happened is that after six years the Government will not give recognition to the other categories and grant aid is not available to them. The 4,200 farmers affected will not get one penny for building the structures that are badly needed. Half of the cattle in the country are out on pasture during winter when they should be housed, but the farmers will not get any help in carrying out the necessary building works. When the Minister was asked about this matter he said that the farmers could avail of measures available to the west of Ireland. At the end of the year I put down a question to find out the amount of grant aid paid for farm buildings in the 12 western counties since the withdrawal of the Farm Modernisation Scheme. I found the total amount paid was £70,000, which would not build much more than a two-storey house. Under the terms of the measures available to the west of Ireland, a person in milk production is debarred from availing of the Farm Modernisation Scheme.

Bovine TB and brucellosis are the cause of much concern in my area. Cavan was completely clear of disease and in reply to a question last year I was told the incidence of the disease in Monaghan was 0.20 per cent. However, bovine TB has been recurring with very serious consequences. In my area many farmers are losing 20 or 30 cattle and this will cause them serious hardship.

According to official returns a sum of £34 million has been spent on eradicating bovine TB. We were told that administrative staff and veterinary officers [1548] received 25.3 per cent of that amount, veterinary fees accounted for 34 per cent, travelling expenses, laboratory fees and vaccines accounted for 14 per cent and the reactor compensation, which most people thought was the most severe burden, amounted to 25 per cent. When the scheme for the eradication of brucellosis was set up there was a staff increase of 50 per cent. At present the figure is about 1,000 and 800 veterinary officers. They deal with approximately 6,000 TB infected herds and 1,300 herds that are affected with brucellosis.

In the Dáil successive Ministers have been asked questions regarding the diseases. It has been suggested that badgers were responsible for the spread of the disease, that cattle in adjoining herds were a factor and even streams were mentioned in the debate. However, the Department have never stated definitely what is responsible for the spread of the disease. The matter is very important and every effort must be taken to remedy it.

Health is an area that costs a lot of money. We were told the budget was a neutral budget but that is not so when existing services are cut. The Minister has reduced by £1.9 million the amount allocated in the case of the health board of which I am a member. Prior to this allocation, he sent to all health boards a tongue in cheek letter asking that major economies be made but saying that services should be maintained. He knows that cannot be achieved without affecting the quality and cover of the services and for a number of years there have been restrictions in the health services. This arises at a time when so many posts in the health services at all levels have been left vacant and for some time. It is utter nonsense to cut the health service allocation by £1.9 million and ask a health board to ensure that the services are maintained.

The Minister has said:

In general, it will be my aim to continue the process of diverting an increasing share of the available resources into the low profile areas of priority needs within the services, particularly in the community area. It is my intention to set aside a disparate [1549] allocation annually within the lifetime of the medium-term capital programme to enable health boards to provide compact basic community care facilities.

He is talking about the capital programme, but we in the health boards were faced on Monday of this week with a reduced allocation to meet the needs under the various headings of community care and institutional care. There is a limit to reduction of running expenses of institutions. The community care area was neglected because we were not able to provide any additional money for home helps or for transport. The home helps get, I think, 60p an hour and we were able to give them only a miserly 10p per hour increase in this budget.

The area of health care has suffered very seriously under the Coalition administrations. Deputy Corish, when Tánaiste, put forward proposals in the early seventies to downgrade a hospital in my county. That was in December 1975 and almost ten years later, there was a proposal last June from the present Minister of Health to close this hospital. By those threats and proposals he has caused deep anxiety among the people of that area. He also discontinued a complete maternity service in one county.

This is a real, fundamental issue. When the boards were set up under the 1970 Health Act they were to provide and administer the health services in their particular regions. I have been a member of a health board since 1974 and feel that the North-Eastern Health Board have acted very responsibly and worked within their financial allocation. They have continued at all times to try to improve the cover and level of services in their region. The Minister is trying to take over the responsibilities of the health care of that region. For about two years — and I am a member of the committee for general hospitals — we have had meetings to examine maternity policy. In February a maternity policy was drawn up to cover the entire region. Included in that were five centres, one of them being a hospital which was not under the direct control of the North-Eastern Health Board. Our [1550] programme was approved by the board and sent to the Department of Health. Subsequently, the Minister saw fit to disregard that programme and replace it with one for three centres administering the maternity services. He also reduced the number of beds from 182 to 165. At health board level we were told that this was done without any health board input into it and without their being contacted on it. We had later a meeting with the Department officials and were told that the health board officials had an input into this.

If the Minister is going to come along over the heads of the health board, who drew up a policy giving facts and figures in conjunction with consultants and senior medical staff of each of the hospitals within the four county region, and disregard the views and work put into the programme, it raises a question of the future of a duly elected member of a health board serving on such a board. This is a serious blow with regard to the administration of the health services. I do not feel that we can be responsible, as a health board, for the administration of health services within a region if that is the attitude. The responsibility must remain with the health board. The people in my county felt so strongly about this that they collected money to ensure continuance of the services in the region. No Minister, irrespective of what party he comes from or what Government he represents, can disregard the wishes of the mass of the people. It would be wrong if that could happen and it is wrong that any Minister should attempt to do it.

We in Fianna Fáil have a definite, clear policy regarding health services within the region and I am satisfied that when that party return to Government that serious situation will be put right. A needless conflict has been created over the building of a hospital in another county, which hospital is urgently needed. This was because the matter was sub judice until the Minister himself spoke here about it. This was a conflict not generated by the health board but rather by a Minister who sought to impose his will on a board and an area containing upwards of 300,000 people. [1551] The Minister should take a very close look at his meddlesome attitude in that regard and not be caught out in the future.

There are a number of other matters in the health field I might mention. One causing great concern is the amount of drugs and their cost generally within the general medical services. In October 1982 we discussed this matter with our health board. Following that discussion I received letters from various chemical companies. In one such letter they told me that there was a regional hospital with an annual medicine bill of £960,000 and probably this year it would amount to well over £1 million. They said they could supply approximately one-third of that hospital's requirements at a lower cost than at present obtains. In the past six months they said they had received orders to the value of £200. They said that when they inquired why they were not receiving orders they were not given a direct answer. They were told the quality of their products was satisfactory and they went on to say that they were aware that their present price was well below current costs. I know the Minister has been applying his attention to this area but he would need to do so more strenuously to ensure that Irish companies who produce on a par with imports are given the orders. If we are genuine about a reversion to genetic drugs it is time the premiums and extra moneys paid for trade names were terminated so that we can effect the type of price reduction indicated in that letter.

It would appear that the present Government in the last couple of budgets have a hang-up about shoes and clothing particularly when one remembers that a few years ago the Taoiseach became very involved in the size of children's feet. Last week, after the budget announcement of VAT on clothing, tags were produced of sizes of children's clothing. The amount of money to be derived from that imposition, I believe, will be like many of the other hare-brained ideas: It will hardly justify its administrative problems and expenditure. There was talk about ten years and ten years and a bit. Seemingly [1552] there has been no definition of size. Parents shopping will find that it will continue to create serious problems for them.

I mentioned earlier that there was need for us to apply ourselves to exploiting to the full our native resources. In this connection I might mention a booklet issued recently entitled Ireland's Forestry Review which has been produced by foresters and personnel of the Union of Professional and Technical Civil Servants. In that booklet it is said that there has been no significant change effected in our policy of afforestation since 1978. Our commitment then to 10,000 hectares a year of new forests was reduced last year to something like 6,000. Indeed, there is immediate danger of redundancy among forestry workers, a running down of the afforestation services generally, which is a particular pity because it is a service that has the manpower, knowhow and equipment required. Naturally, there will be a reduction in the motivation of workers when they see earlier targets not being achieved or the money not being provided to ensure their achievement.

I saw a recent survey of land qualities in which it was contended that the drumlin soils were very suitable for afforestation. There is much marginal land available at present, a lot of it at reasonable prices — indeed, a lot cheaper than some land purchased by the Forestry Division some years ago. Apparently the Department are not in a position to purchase that land and proceed with their policy of afforestation. I have seen various surveys showing that we should be self-sufficient in softwood by 1984, but last year we still imported something like £80 million to £100 million worth of timber. The Government should be examining those areas because they have enormous potential for growth and development.

We had yesterday the announcement by the Minister for the Environment regarding an increase in the qualifying limits for SDA loans, admittedly by £1,000 only, and also a raising of the loan amount by £2,000, which I welcome. That Department must carry out a thorough re-examination of our housing [1553] needs, of the provision of houses and their quality to ensure a longer life for our housing stock. In the mid-1970s there was a directive given at local authority level that less money be spent on maintenance. This has meant that much tenanted local authority housing stock has deteriorated greatly. Indeed, some such housing schemes, if not maintained and done quickly, will fall into complete disrepair which will necessitate the erection of new houses.

Therefore, the Department should insist on local authorities carrying out a closer examination of all aspects of these loans. For example, a figure of £16,000 is completely inadequate in current circumstances for the building of a house. Local authorities should go into the business of providing serviced sites. In many cases the provision of services, water sewerage and so on, costs half the amount of loan an applicant may receive. Indeed, from statistics it appears that it cost the Exchequer £116 million last year in rent subsidies. We shall have to ascertain how those people who wish to build their own houses can be facilitated in the future. Over many decades now the construction industry has been recognised not alone as a good barometer of the health of our economy but also as a prime mover in getting the economy going. If there was greater input into the construction industry at present it would get our economy moving. It is absolutely essential that that industry receive some impetus.

This year also we will be faced with the serious problem of lack of funds within local authorities for the maintenance of services within their respective areas. Indeed, we are not putting up the money necessary to implement the 1980 Roads Development Plan. When we discussed that plan at local authority level in 1980 there was a projection of the funds that would be made available for that purpose. There is no doubt but that we shall experience serious problems with the implementation of that plan even on a scaled down basis, this year.

A number of people have experienced great difficulty in paying the charges imposed for services last year in respect of which a considerable amount of time [1554] has been spent at local authority level examining applications for remissions and so on.

In June last year we had a debate on the Border regions. I said to the Minister for Finance that, if we wanted to make any headway with the money being made available from the Regional Fund and the Border Counties Fund, we would have to have an administrative presence on the ground to ensure that the moneys would be used to the best advantage. He claimed that the various Government agencies and local authorities were capable of handling the matter. However, on 14 January I noticed an announcement of the appointment of a Mr. Fanning who would have responsibility for the southern region and that he had been made a full-time EEC representative by the Commission. They have made this appointment in Munster and have continually ignored our request for an administrator-co-ordinator in the Border regions which would ensure that the money would be channelled properly. Perhaps the Minister would reconsider our request.

Over the last number of years we have introduced the Programme for Western Development. I am sure the Minister is well aware of this as it covers his county. Deputy MacSharry introduced it in April 1981 and, if the scheme was properly implemented and supervised, it would change the face of the 12 western counties. They have been declared severely handicapped, but after three years we have made very little progress and in some areas no progress at all. This is because of the terms of the income qualifying limit and also because if a person in the west was a milk producer he was debarred from qualifying for many aids under this scheme. The Government also reduced the qualifying limit for headage from over £5,000 to about £3,000. In the first year of the operation of the scheme where £30 million was available only £6.3 million was used and in 1982 there was an expenditure of £17.6 million. This is penny wise, pound foolish, because practically all the schemes — water supply, roads, electrification, land improvement, agricultural production, calf to beef [1555] scheme and private afforestation — were all entitled to substantial grants. Perhaps these schemes were not sufficiently advertised but they were not availed of and the money has not been used. Some 50 per cent of the money was being provided by the EEC and I am sure that in the years to come there will not be such a substantial allocation. The Government must ensure that the money, pound for pound, is matched and that the schemes will make a more meaningful and substantial contribution to that region.

The budget has not created the confidence required to ensure that the economy moves again. There is a crying need for employment. There are about 2,000 people unemployed every month and the policies which the Government are pursuing will do nothing to halt that trend. We must closely examine our own resources and see how they can be fully utilised. We must ensure that import substitution is tackled meaningfully and vigorously. It is no good setting up review bodies who will not report for a couple of years. There are empty factories all over the place. We have young people and, while the country owes nobody a living, it certainly owes them an opportunity. The Government owes the young people an opportunity to ensure that they have a chance of employment. People who are selling goods and those who purchase them all have a responsibility to ensure that they are doing all they can to provide work in the years ahead.

The Minister will have to look at the disadvantaged regions which he ensured were more seriously disadvantaged by his impositions in 1983 and by the continuation of the Government's lunatic policies in 1984. Many of the jobs which disappeared in those areas should have been retained, which would have meant more revenue for the Government.

Mrs. Taylor-Quinn:I should like to take this opportunity of welcoming the budget which is a very good one, given the present financial climate. I believe that the budget will ensure the continued fall in the rate of inflation and will reduce [1556] the budget deficit percentage on the gross national product. I am sure, a Leas Cheann Comhairle, you can appreciate the overall importance of the economic future of the country in achieving these points. At the same time, the budget gives recognition to the plight of the PAYE sector who are shouldering a very substantial amount of the tax bill.

We are now in the fourth day of the budget debate and I have looked to the Opposition to make some positive contribution. However, all we have heard is a continuous tirade of negative contributions. I wonder if the Opposition are seriously interested in our economic plight. If they were, they would make constructive contributions which would be of assistance to the Government. To date we have not heard one such contribution. When the Leader of the Opposition made his speech this morning I expected to hear very positive and constructive suggestions, but I was very disappointed when I heard what he had to say.

I believe this budget is going in the right direction. The Minister said there were clear indications of an economic recovery in Europe and the United States and that it was opportune for us to prepare ourselves to take advantage of that recovery. In the past successive Governments looked to the boat to solve our economic problems and over the years we exported some of our finest people. I still believe the boat is the solution to our economic problems but in a different way. We could export the finest quality goods if we put our minds to it. There is a necessity to re-educate the attitude and mentality of many of our people towards their work and the quality goods they produce.

The best solution to our present economic problems is the world market, which is very competitive. but if we can produce a quality, cost-competitive product, the opportunity to substantially improve our balance of trade are enormous. Taxation is very high but, given the reality of the state of the public finances, that is something we must live with. However, this should not mean that we as a people cannot face the problem. [1557] We need to translate our pride of being Irishmen and women into our work. That means that those of us who are fortunate enough to have jobs should work every hour we are supposed to. It does not mean extended sick leave or tea breaks. It means treating the raw materials we have with the utmost respect and striving to produce quality goods. We should not direct our frustration and agitation at our public representatives and the Government but at our real competitors on the world market. We will be able to compete by producing a better quality product and so avoid importing goods which we could very ably produce here.

There is another group of people who must be referred to, that is, the wealthy group of tax evaders. It is not acceptable that a group of people can evade tax and literally sit down in their drawingrooms studying the Stock Exchange and working out how they can make profits quickly. That is an unacceptable situation, especially when it is at the expense of the taxpayers. I would like to congratulate the Minister and the Government on trying to close that loophole. It is essential that we continue to pursue tax evaders because we have to be seen to be equitable. It is unfair to ask a certain sector to make a substantial contribution while a wealthier group are allowed to evade tax.

A great deal has been said about the public sector and the numbers employed in that sector. It is generally accepted that a real increase in the numbers employed in the public sector took place in the last ten years. I am sure these people will acknowledge that they are in a very privileged position because they have permanent and pensionable employment and that they will show their appreciation in our present economic circumstances by making fewer demands for pay increases. This is the least that should be expected of them. I ask them to recognise their privileged position and to be moderate in their pay demands.

Many people said the poor and the lower income sector have not been adequately taken care of. How does one define “adequately taken care of”? Given the present circumstances, the Minister [1558] has done a great deal to improve the lot of the poorer section of the community and the lower income group. A 7 per cent increase in social welfare has been granted and he allocated £13 million towards the family income supplement fund.

I was delighted that the Minister for the Environment announced yesterday that there would be an increase in the SDA loans from £14,000 to £16,000 and that the eligibility limit would be increased from £7,000 to £8,000. This is a very significant move and proves that the Government are committed to helping the lower income group. This budget will ensure that more than 15,000 people who were paying income tax will no longer be eligible. These are very significant factors.

We all recognise that agriculture is the backbone of our economy. I am delighted the Minister made an additional £5.7 million available for the AI and ground limestone subsidy schemes. He has shown how important these schemes are by making this allocation. The Minister said EEC schemes were due to expire on 30 April and that an extension was being sought. I would like to take this opportunity to say that these schemes are very important, particularly to the west, and I urge the Minister and the Government to make every effort to ensure that these schemes are extended.

I said earlier that the boat solved many of our economic ills in the past. I am delighted that the Minister has recognised all the Irish people who were forced to emigrate, especially those who went to Britain, by increasing the welfare centre contribution to the centres in Britain from £38,000 to £68,000. This was a very welcome increase and I congratulate the Minister for taking that initiative.

We have made a major breakthrough as far as tourism is concerned and 1984 will prove to be a tourist bonanza because of the measures introduced in this budget. There has been a reduction to 18 per cent VAT on the hiring of cars, boats and caravans and, in addition, tourists who purchase in retail outlets will have the VAT on those goods returned when [1559] they are leaving. That is very important. It will heighten the attraction of Ireland to tourists from North America and the Continent. As a western Deputy coming from a county where tourism is very important, I welcome that measure. I have no doubt it will be of benefit in the forthcoming tourist season.

A contribution was also made to the sporting sector. That is very important, particularly for our young people. Many young people are unemployed and it is absolutely essential that more facilities for sporting and leisure activities should be provided. I welcome the contribution of £100,000 to the GAA. Clare is the home county of Michael Cusack. The Clare GAA asked me to convey their special appreciation of this contribution to the Government.

Many Opposition speakers referred to a lack of confidence or a no confidence factor in the Government. There is every confidence in the Government. The people of Ireland have confidence in the Government. The poll published by The Irish Times this morning shows specifically that the people have confidence in the Government and the line of action taken by the Government.

I congratulate the Minister. His actions will enable the Government to achieve the goals set out when they took office. This budget will prove to be a very good budget for the economy, and next year our economy will be in a healthier state and we will be in a position to make real inroads into the problem of unemployment.

Mr. Noonan:(Limerick West): The budget presented by the Minister last week highlights further the Government's retreat from the Irish agricultural industry. The Government have abdicated their responsibility to the farming sector. In the booklet published recently entitled Economic Background to the Budget 1984 it is stated that agricultural growth in 1984 will be dependent on the outcome of the EEC negotiations particularly with regard to the restructuring of the Common Agricultural Policy and the outcome of the proposed super-levy.

This signifies clearly the Government's [1560] neglect of the agricultural sector and the handing over of their total responsibility to the EEC bureaucrats. The budget provided no incentive for agricultural development. This incentive is a prerequisite for total recovery. We know that real farm incomes declined by 1 per cent in 1983 and the indications are that there will be a further decline of 5 per cent in real terms in 1984 as a result of Government inactivity. This significant drop in farmers' income is the Government's legacy to rural Ireland.

This budget was the least significant in terms of changes actually made for many years. It has been referred to as a neutral budget cobbled together for the sake of expediency because no clear cut decisions could be made by the combination of parties now forming the Government. There was a lack of activity and a lack of decision in the Minister's budget speech. There were no cuts of any consequence in current expenditure. The burden of taxation, which is far too great, will continue to be felt in 1984. Some very minor reliefs were given in personal taxation and this was done within the existing structures.

The tax bands which apply to most taxpayers were not index-linked. An insignificant allowance is being given to lower income taxpayers and it tends to complicate the present income tax system. We have many areas of taxation: income tax, PRSI, health and related charges, the youth employment levy and the special income levy. All these tend to complicate our taxation system. We set up the Commission on Taxation. No recognition has been given to their report issued some 16 or 18 months ago.

It is difficult to understand the thinking behind this budget. We were told that the programme prepared by the two parties now forming the Government would have as a priority the reduction of the budget deficit. Last year in his budget the Minister introduced severe taxation for that purpose. We all know what the story was at the end of the year: no significant reduction was made. Therefore one questions the integrity and the approach by the Government to getting the State's finances under control.

[1561] While we were in Government this party were blamed by the present Government for the size of the national debt. As pointed out by the Leader of the Fianna Fáil Party this morning, the main problems occurred in the 1973-77 period of Government. Borrowings during that period were far greater than in the period from 1977 to 1981. It is important to realise fully that the fault lies with this Government's complete lack of capacity to tackle the serious problems of increased current expenditure. Their approach is to decrease capital expenditure. These measures are not geared to the expansion of the economy and no effort is made in the budget to provide any hope of employment, particularly for our young people who see no hope for the future. The Government go along their merry way moving from one crisis to another and not sorting out any of the serious problems affecting us.

This negative budget has accelerated the Government's retreat from rural Ireland which commenced on 14 December 1982 when they took office. No budget speech since the foundation of the State has devoted so little attention to agriculture, our major industry. The Minister mentioned only the continuation of the relief given two years ago by Fianna Fáil in regard to the transfer of farms to young trained farmers. There is also to be a continuation of the lime and AI subsidies. There has been no new thinking from the Government in regard to agricultural development. They have abdicated their responsibilities to the bureaucrats of Europe. I wonder whether this is a reflection of the lack of muscle of the Minister for Agriculture at the Cabinet table.

The budget is a non-event for all sections of the community. It provides no new incentives for the expansion of agriculture. Thousands of millions have been invested in the farm sector during the past decade but there is a Government unwillingness to provide the necessary incentives to increase the breeding herd, thereby increasing output and recreating jobs in the food industry. There seem to be funds available in many other areas — for example, Dublin Gas — but funds [1562] are not available towards increasing life-stock numbers. By ignoring our major industry the budget will lead to increased job losses in the farm and food industries, resulting in higher unemployment figures. All forecasts agree — and the Government admit this — that unemployment figures will again rise this year. This is due to lack of Government activity. The unemployment legacy of the Government will go down in history.

The lack of a definite farm policy has devastated confidence and destroyed any remaining initiative. The budget will be remembered as signifying the end of the food industry. It is totally negative and the Government have been the greatest prophets of doom. They have done more to undermine confidence than the dreaded super-levy. Unfortunately they have matched this preaching with higher taxation, higher unemployment and higher current budget deficits.

The budget can also be criticised because it totally ignores agriculture. That is an indictment of the Government's preception of the part our largest industry has to play in the improvement of the economy. That is only half the story. Farmers will justifiably argue that they have had a special budget of their own announced in bits and pieces by the Minister for Agriculture during the past few months. All the news is bad. Apart from the dismal EEC outlook, several measures have been announced by the Government which will reduce farm income and stifle any possibility of reinvestment, as well as stifling the optimism which is so necessary at all levels of farming. The penal levies on beef and milk, the extension of payment for our produce in intervention and the downgrading — almost non-existence — of the Farm Modernisation Scheme will hurt farming in both the long and short term.

What further blows can the Government inflict on our greatest industry? Undoubtedly further blows will be inflicted. The farming community do not have confidence in the Government to negotiate a worthwhile deal at the summit meeting in Paris. They have failed dismally in the past and I hope they do better in the future. The Taoiseach [1563] should again visit the Heads of State and impress on them the importance of the dairy industry to us. It is basic for future expansion and for a better standard of living for dairy farmers.

Many of the Minister's pronouncements in Brussels were purely a public relations exercise. How could he argue with conviction in Europe that Ireland was getting a raw deal when the next day he returned home and dealt a new body blow to farmers? The Agriculture Ministers of the other EEC countries are aware of what is happening here and will see that the Government's actions are not in line with the Minister's posturing at the Council of Ministers meeting. This must damage our credibility in the vital negotiations which lie ahead.

The budget and the Government's performance over the last year bolsters my conviction that they do not have a plan for agriculture. While it is frustrating to realise that they do not know where the industry is going, what is even more distressing is that they apparently do not care. I am not alone in saying this. Many of the editorials in the farming newspapers have stated that the budget does not extend any ray of hope. There is no hope for the hard pressed food processing sector. There is no provision for future development. This will hit the whole economy since output and exports cannot increase because farmers do not have a sufficiently high net income to enable them to invest in production. The Minister has shown a total disregard for the potential of our greatest industry and has left untouched the overall tax structure as it applies to farming.

Minister for Agriculture (Mr. Deasy):We did not bring in a land tax.

Mr. Noonan:(Limerick West): The Minister will have an opportunity to speak about how he can help the farming community.

Mr. Deasy:Tell us more.

Mr. Noonan:(Limerick West): When the time comes we will tell the Minister all about it and I hope he will listen. We [1564] will have a policy for agricultural development of which taxation will be part and parcel. Any schemes which we introduced while in Government have been put aside. The Farm Modernisation Scheme is not in operation at present.

Mr. Deasy:It is.

Mr. Noonan:(Limerick West): The Commission took a lead from the Government and suspended it. The Minister gave the Commission many leads on how to deal further body blows to the farming community. He cannot fight our case with credibility in Europe. Both he and the Minister for Finance have shown a total disregard for our greatest industry and have left the tax structure as it applies to farming untouched. He has guaranteed a bleak year for farmers.

Mr. Deasy:A leap year.

Mr. Noonan:(Limerick West): Their costs are rising and they have been added to by the increase in levies which the Minister has imposed. There are levies for disease eradication and veterinary inspection. Many cut-backs have been imposed on agriculture. The Estimates have been decreased in real terms. The overall increase for the Department was a miserable £5 million of which £4 million goes on administration charges. That leaves £1 million for agricultural development. When we take inflation at 8 or 9 per cent it is in effect a major reduction. As was pointed out by Deputy Haughey, the allocation to agriculture is on the downward trend. This is a clear indication, irrespective of what the Minister says, of the Government's hasty retreat from agricultural development and from the development of rural Ireland.

The provision of £100,000 for the potato market co-operative is a mockery. The Government have come up with laudable schemes but they have not been backed up with finance. I wonder what the Minister of State, Deputy Hegarty, thinks about this. It is a mere pittance. It shows the Government's total contempt for agriculture and all that it means for the country. The Minister of State is [1565] being asked to do the impossible. He has responsibility for reviving this ailing industry which has been given the kiss of death.

I also want to avail of the opportunity provided by this budget debate to call on the Government for the report of the working group established when we were in Government and I ask them to allow this report to be implemented as soon as possible so that we can have a national plan for agricultural development. Farmers and those responsible for food processing and marketing have been left without any guidelines or support by an uncaring Government in one of the most difficult farming periods ever experienced.

I want to repeat now something I have often said in the past. The growth in the national herd is the key factor in determining agricultural growth in both the short and the medium term. Fianna Fáil when in office had drawn up sound basic plans with that objective in view. Over the past 12 months all we have heard is talk of closures and short-time working in our meat factories with consequential serious damage to employment, to the balance of payments and to farming confidence. Here and now I call on this Government for a public declaration of support for this industry at this most critical time. Many farming incomes will fall again this year despite the industries best efforts. I strongly urge on the Government the introduction of a capital investment plan at reasonable rates of interest for the development of agriculture. If that is not done the wherewithal simply will not be there for investment in increased production which not alone the farming community but the whole nation needs so badly.

The farm rescue scheme was introduced by a Fianna Fáil Government. It is progressing reasonably well. It may be the survival kit for many progressive farmers experiencing financial difficulties at the moment. A major concern of our party and of farming organisations is those farmers excluded from the scheme who are currently fighting for survival. The Government must take a new look at the farm rescue package because the [1566] farmers who are now in dire straits were the self-same farmers who pioneered agricultural development during the last decade. The solution to their problems lies in some financial institution taking out a foreign currency loan in order to take over their debt and substantially reduce the rate of interest to a figure farming can bear. The loans should be underwritten by the Government thereby ensuring a fixed rate of interest for a period of up to five years. That would be a positive investment in the future of agriculture and it would yield much greater dividends than many other proposals which are being implemented. In addition, it would be a measure of the Government's commitment, if there is a commitment, in practical terms to the farming sector as against the talk we have heard recently from both the Taoiseach and the Minister for Agriculture. The time for talking is over and what we now need from the Government is action, action designed to ensure the development of our primary industry. The high level of interest rates is a clear indication that the world of finance here, including the Central Bank which is an arm of the Government, does not believe that the rate of inflation will continue to decrease.

Our economy is heavily dependent on agriculture. This has been the case for centuries. Despite the increase in the manufacturing and servicing sectors agriculture still has a prime place in the economic and social structure. Agriculture is more important in Ireland than it is in other EEC countries. One in five of the work force is employed in farming or in some aspect of agriculture. Agricultural exports account for upwards of 50 per cent of our total net exports because of their very low import content. It would be logical in such circumstances for any right thinking Government to ensure agriculture is given top priority. One would expect — the groundwork was already there when the Minister assumed office — that a detailed plan would be devised for the operation of various schemes and incentives, a way forward clearly delineated, the targets set and the means of attainment clearly indicated.

Unfortunately that is not the case [1567] either because of ignorance or perhaps because people think farming is not as important to the economy as it once was, and so this Government have consigned agricultural development to the waste paper basket. The Taoiseach and the Minister for Agriculture seem to envisage a reduced role for agriculture in the future. Indeed, the Minister was not included in the task force of Ministers with responsibility for getting the economy moving again. Such an important sector as agriculture with such growth potential should have a central role in taking us out of the present recession and providing extra employment. When we were in office we set up a high powered group to review policy and identify areas with the greatest potential for expansion. In our programme, The Way Forward, we spelled out the effects of an increase in output, a better income for farmers, greater employment in the food processing and service industries and a reduction in our balance of payments deficit. Increased prosperity would not be confined to those involved directly in agriculture. It would filter through to many businesses, big and small, in rural areas. Instead of considering ways to increase agricultural production and to foster investment, one of the first actions of the Government on coming into office was to virtually axe the Farm Modernisation Scheme. Most of the grants that were available by way of that scheme were either terminated or suspended.

Let us consider other areas in which the budget makes no contribution to agricultural development. The Government have created an environment in which increased production in agriculture is not now attainable. There have been cuts in the advisory services and charges have been introduced in respect of visits to farms by ACOT staff. There are also restrictions in respect of livestock headage payments under the disadvantaged areas scheme. Financial saving is minimal and bears no relationship to its discouraging effect on expansion. The Government have reneged totally on their preelection promise to provide Euro loans at fixed interest rates. This promise [1568] formed a part of the Labour-Fine Gael Programme for Government and was part also of the earlier Fine Gael programme for agricultural development.

All of these decisions give the distinct impression that the Government regard agriculture as a declining sector of the economy. If farmers see the towel being thrown in by those charged with running the country, how can they be expected to have the confidence that would enable them to invest in their farms? There is no need for me to emphasise the importance of the cattle and sheep enterprises to the economy. Exports of cattle and sheep account for a substantial amount of our total exports. It is feasible to increase these exports by at least 20 per cent in volume alone within a very short period. Such an increase would result in an increase in earnings of up to £140 million. Having regard to the relatively low level of imports in agricultural production compared with industry, we would be talking of an increase of upwards of £400 million in industrial exports. That is a very substantial figure.

The Government are throwing away the opportunity of vital exports to many Third World countries. They are downgrading agricultural development and creating a situation in which farmers will not be prepared to consider increasing their production. This situation is being brought about by reason of the taxation system and of the run down by the Government of agricultural development.

We are spending millions of pounds in trying to find oil off our coast but even if we find the oil it may not be a viable proposition because of the high cost of extraction and the somewhat depressed state of the market. On the other hand, we are not providing the wherewithal for the development of our cattle herds and sheep flocks.

Mr. Deasy:Is the Deputy suggesting that we should not look for oil?

Mr. Noonan:(Limerick West): In keeping with his performance in the Department of Agriculture, the Minister is not with it. He is not listening to what I am saying.

[1569]Mr. Deasy:It is a load of rubbish.

Mr. Noonan:(Limerick West): I repeat that we are spending millions of pounds in our search for oil.

Mr. Deasy:We are not spending a penny in that area. The oil companies are footing the bill.

Mr. Noonan:(Limerick West): If we were prepared to spend such vast sums of money on agricultural development we would improve our balance of payments considerably.

Mr. Deasy:The Deputy is talking through his hat. Deputy O'Brien is right.

Mr. Noonan:(Limerick West): I am sure the Minister will have the opportunity shortly of making his contribution so I hope he will allow me continue.

Mr. Deasy:The Deputy has made a false statement. The oil companies are the ones who are spending the money on the exploration off our coast.

Mr. McLoughlin:The people opposite are not interested in oil. They have been throwing out money all week as if it were confetti.

An Leas-Cheann Comhairle:Deputy Noonan, without interruption.

Mr. McLoughlin:They are the pound stretchers.

Mr. Noonan:(Limerick West): We have the technology and the management skills to enable us to increase production in terms of our cattle herds and sheep flocks. Markets to cater for increased production are guaranteed within the terms of the Common Agricultural Policy. I am only asking why we do not concentrate all our energies and more of our resources on this type of development.

Let us consider another area to which there is reference in the budget, that is, [1570] the question of new land policy. We have been hearing the Minister and the Minister of State talk about this subject. If the Government are in office in 12 months' time, I expect we will be in the position still of having to ask about when the legislation on land policy will be introduced. There are many young farmers and aspiring young farmers who are much in need of land but there is a problem in regard to the underutilisation of land. Conditions which are being supported by the Government are resulting in many more farmers having to get out of farming. This trend will continue so we must ask how best we can avoid the viable farm of today becoming the marginal farm of the future. It is important to promote land mobility by way of leasing but this presents difficulties. We have questioned the Minister and his Minister of State as to whether a policy of land leasing will be supported, where necessary, financially and we have been told that the answer is no — a further indication of the Government's approach to agricultural development. There is need for a comprehensive coherent fiscal policy by the Department of Agriculture, the Department of Lands and the Department of Social Welfare if the land leasing scheme is to get off the ground. At the moment some of the policies in operation are hostile to the implementation of such a scheme.

There is need for an attractive retirement scheme for farmers, and this is something that must be considered. I wish to emphasise the importance of retaining the Land Commission and the powers of the commission. They have served the country well during the years and they have ensured that land is retained for those trained to work it. An important matter we must not overlook is that in the past 12 months 50 per cent of the land that came on the market was purchased by non-farmers. That figure must be considered carefully in the context of the powers of the Land Commission. We must have a land leasing system on a one-to-one basis rather than having land bought by wealthy people who are not farmers. We must ensure that this matter is supervised and ensure that the [1571] safeguards included in the 1980 White Paper on land policy are maintained.

The most important economic objective is to reduce our balance of payments deficit. We can do that by increasing the volume and the value of exports and the quickest way to do that is by raising the output of our greatest industry, namely, agriculture. In this way the benefits will accrue not merely to the farmers but to the entire nation. The potential is there provided we have the political will. Our policies during the years have ensured that the potential exists for expansion of the industry and I appeal to the Government to continue with those policies. They provided the investment needed to build up the infrastructure for Irish agriculture to a level where its full potential could be realised. In addition, these policies gave hope to the men on the land and to those employed in the food processing industries; but, unfortunately, all these approaches have been belittled by this Government in their policies with regard to agriculture.

The EEC is having a major impact on our way of life and on our incomes, not only with regard to agriculture but also with regard to the entire economy. I urge the Government to support the Commission's proposals at the Council of Ministers to increase funds for financing European common policies. I have in mind particularly the proposal to raise the existing ceiling of 1 per cent VAT in the Community's own resources. Community expenditure could shortly reach a point that would require a greater percentage of revenue from VAT and if that is not forthcoming some policies may have to be curtailed. Any curtailment of the Common Agricultural Policy would be particularly damaging to Irish agriculture and to our national economy. The proposals will require a unanimous decision by the Council of Ministers and I expect the Government to take every initiative to secure a unanimous vote in favour at Council level. The proposals will also need a three-fifths majority in the European Parliament and I trust the Government will use their influence to secure a favourable outcome there.

[1572] We have had a special debate here on the proposed milk super-levy and I do not intend to deal with that matter now. I wish to emphasise that the super-levy would penalise unfairly the smaller and weaker Irish industries for problems directly caused by larger and better-off farmers in Europe. I hope the Minister, supported by the Minister for Finance and the Minister for Foreign Affairs, will do everything possible to ensure that we secure a full exemption until the average milk yield here is equal to that of the European average.

This must be done and, if we do not succeed, the blame can be laid fairly and squarely at the door of this Government, the Taoiseach and the Minister for Agriculture because of their policies at home with regard to agricultural development and their lack of credibility at the negotiating table of the Council of Ministers. We must be seen to give leadership to these councils as we have in the past. I hope for a co-ordinated approach by the Government, fully supportive of the Minister for Agriculture in the negotiations. If we fail here, we fail not alone agriculture but our economy. We will fail also to give leadership to our people. Above all, we shall be ensuring that the legacy being given to us by the present Government will continue. They have beaten a hasty retreat from agriculture and from rural Ireland.

Minister for Agriculture (Mr. Deasy):1983 was a good year for farming in Ireland. We had the highest growth in real incomes in the whole of the European Economic Community. Listening to Deputy Noonan, one would not think that that was the case. The growth in real incomes in 1983 was 3½ per cent, whereas some countries suffered a serious decline — West Germany, for instance, suffered a decline of approximately 20 per cent in real farm incomes. It was a considerable achievement to show a growth in incomes when virtually every other country in Europe was registering a decline, significant in some cases.

I shall reply to a few points made by Deputy Noonan. He talks about the [1573] imposition of penal levies by this Government. I should like to point out that these levies were originally imposed by a Fianna Fáil Administration in 1979, when farming was in the throes of a dreadful depression. They were imposed at approximately twice the rate of the current levies. Therefore, it is not correct to talk about an imposition. The proper expression would be a reintroduction of levies which have existed for some years from 1979.

The veterinary inspection fees are not levies; they are fees to cover the cost of inspections at meat factories. They have been there for a great many years and are not a new imposition. They cover only 70 per cent of the cost of veterinary inspections in those factories.

Deputy Noonan spoke about the dismal failure of this Government in the talks on the proposed milk super-levy. I should like to point out that the original Commission proposal of July 1983 was that milk production in every member state would be tied to the 1981 level of production, plus 1 per cent. The latest offer made by the Greek Presidency at the Athens summit meeting early in December was that Ireland be allowed to produce milk at the 1983 level, plus 10 per cent. Since that Athens meeting I have not met one farmer in the whole of this country who had anything but praise for the Government's negotiating tactics at those talks and I have yet to hear one. That was a startling improvement on the original proposal. However, as the House knows, we stated that it was not acceptable to us.

On the other hand, let me point out that a number of countries have vehemently opposed our getting an exemption of any description. They opposed that final offer made by the Greeks at that Athens summit meeting. Those talks resume next Monday in the Council of Agricultural Ministers in Brussels. I want to re-emphasise that there is nothing but praise for the manner in which we have conducted those talks to date. We intend to continue our resolute stand with regard to our opposition to the Commission's proposal.

Has Deputy Noonan forgotten that a [1574] Fianna Fáil Government of the 1977-1981 period introduced a resource tax and a 2 per cent levy on farm commodities which was just about the most unpopular move that was made against our farming community and agriculture in modern times. Of course, that 2 per cent levy had to be abandoned. The Deputy talks about the recent budget having done nothing for agriculture: it has done a lot for agriculture. It certainly did not set out to penalise people producing agricultural commodities, as did the resource tax and the 2 per cent levy.

We have on our hands at present, where the economy is concerned, a much tougher battle than the Fianna Fáil administration had from 1977 to 1981; but they were the people who imposed the penal taxes and penal levies. We did not impose any additional capital taxation on agriculture in the recent budget. However, Deputy Noonan has been advocating a land tax, at a time when farmers are extremely sensitive about their whole future because of the attempts by some of our fellow members in the EEC to dismantle the Common Agricultural Policy. This is not the time to talk about introducing additional capital taxation or land tax.

I was glad to see that Deputy Noonan's Leader, Deputy Haughey, contradicted his agricultural spokesman last week and said that no land tax would be introduced by a Fianna Fáil Government. He had to do so: the reaction of the farming community and the farming organisations was so intense there had to be a retraction. Politically, it was highly unpopular, economically, it was highly undesirable. I am glad to note that the Opposition leader has placed the matter in abeyance.

I do not know from where Deputy Noonan gets his information about disenchantment among the farming community. The farming community are relatively happy in these very tough times. In 1983 they did quite well. I noticed in today's opinion poll in The Irish Times that one of the groups most satisfied with the Government's performance was the farming community. That is the best evidence available to me. If Deputy Noonan has some other magical secret source as [1575] to the disenchantment or otherwise of the farming community we would all be intrigued to hear about it. But that opinion poll speaks for itself. It verifies what I have said about the reasonably good year our farmers had in 1983, about the rise in their real incomes.

Reverting to the milk super-levy controversy for a moment, I did say that the negotiations recommence next Monday. We hope there will be a successful conclusion to these talks at the March summit. It is essential that we reach a solution at that meeting of Heads of State in March because, as we all know, the Community has run out of money. Over the past three weeks we have seen the effects of this when the Community has made some very serious proposals regarding cuts in spending in agriculture. If there is not agreement in March I am afraid the cuts we have seen will constitute the tip of the iceberg only, that there will be considerably more serious and harsher cuts because the money just is not there. However, if we do reach agreement on the super-levy proposal it will mean a cut-back in the amount of milk produced and particularly the amount of milk paid for. Therefore, we shall not have to have the all-round type of cuts which would follow automatically if that summit collapsed.

Worst of all, if that summit were to collapse there is a fear that the super-levy proposal might be abandoned completely. I use the word “fear” in a very deliberate manner because, if the super-levy proposal does not go through, the alternative will be much worse. The alternative mentioned is a direct cut in prices which would have far more serious repercussions for this country than anything else, far more serious implications. Therefore, we are concerned that the production of milk in Europe be curtailed but we are insistent that we should not suffer as a result. That has been our stand all along and will continue to be our stand.

I am hopeful of a satisfactory outcome to that March summit. I might say that the Athens summit did not collapse just because of disagreement over the milk [1576] super-levy proposal. There was not agreement on any point at the Athens summit, whether they were financial guidelines, future financing of the Community, the British budgetary refund or the accession of Spain and Portugal — there was not agreement on any one of those five major points. Therefore, it is incorrect to say that that summit failed because of disagreement over the milk super-levy proposal. It was a component only of the overall disagreement.

Another point on which I want to correct Deputy Noonan is his amazing statement about the Government spending millions of pounds on the extraction of oil off our coasts. The Government do not involve themselves not alone in extraction but even in exploration for oil. That job is done by oil companies who operate under licence from the Government, but there is no cost to the Government. That was an incredible statement. I could not believe an Opposition spokesman could be so ill-informed. And we have not even reached the point of extraction; we are still exploring. Hopefully the find off the Waterford coast will be commercial and, if it is, we shall start thinking about extraction, but even then the Government will not be involved in contributing to its cost. That is a matter purely for the oil company concerned.

Notwithstanding the difficult economic climate there have been significant and favourable developments in the national economy and finances in 1983. Inflation fell from over 17 per cent in 1982 to 10½ per cent in 1983. The high balance of payments deficit was very substantially reduced last year. Industrial exports grew by some 14 per cent in volume terms, while manufacturing output increased by some 6 per cent. The overall Exchequer borrowing requirements as a proportion of GNP fell by more than 3 percentage points and, as a result of Government action in the last two budgets, has now been brought back below the 1979 levels.

These favourable developments have also been evident in the agricultural sector. Gross agricultural output increased by some 3 per cent in volume terms to stand at its highest ever level. This was facilitated by growth in cattle, milk, [1577] sheep and pig output. As a result of increased input usage, net agricultural output increased by about 1 per cent. Allowing for other farming expenses and subsidies, total farm incomes increased by over 11 per cent in nominal terms and by about 1 per cent in real terms. Adjusting for movement in the labour force, per capita real farm incomes increased by some 3½ to 4 per cent.

1983 represents a second year of growth in gross and net agricultural output while farm incomes have increased each year since 1980 in nominal terms and since 1981 in real terms.

Despite these improvements in the national economy and finances, we continue to face an uphill battle. The steps taken to rectify the public finances during the past year were necessitated by the excesses of earlier years and must be followed through by a continuation of greater discipline in public expenditure, reduction in borrowing and the eventual elimination of the current budget deficit.

After two decades of considerable economic growth, the years since 1980 have seen a virtual standstill in the economy. Our population has grown by almost 4 per cent so that GNP per person in this country has declined by 4 per cent over the past three years.

In the face of the declining national incomes per head it is not surprising that there has been a sharp and extremely worrying increase in unemployment. The underlying trend in unemployment is still upward and we must all be seriously concerned at the consequences of this trend unless it can be reversed very soon. We will, however, only succeed in sustaining our present level of employment and creating new jobs if the growth in production costs is brought down below the level prevailing in competing countries. The Government's policies are designed to do this. This means that we must achieve a substantial reduction in the level of annual price increases from the present 10 per cent so far this year to a level of around 5 per cent.

The reduction will have to be achieved in spite of the difficulties we face in reducing our current budget deficit and in the [1578] trends in exchange rates, particularly against the dollar.

As well as the considerable progress in reducing inflation in the past year we have also made great strides in reducing our balance of payments deficit. The estimated outturn for 1983 was under £400 million compared with over £1,400 million just two years ago. While this improvement is most welcome, it has to be accepted that it is due in considerable measure to the present recession, and renewed growth at home could well lead to a substantial disimprovement in the external trade situation.

At the same time the national Exchequer position continues to give rise to serious concern. The budget deficits of recent years meant that we had to resort to borrowing from abroad on an extensive scale. This in turn has created a large commitment to repayments over the coming years. Between now and the end of this decade we will have to find in excess of £1,000 million a year to finance the repayments of external Government debt without allowing for any addition that may arise from any new debt or refinancing over the intervening years. I have seen comments that the problems of the Exchequer are only a matter of bookkeeping and that in some way that means they can be ignored. This attitude is a deliberate and unscrupulous deception. Just as any household or any commercial firm cannot go on running up large debts and expect a continuous subvention from the local bank manager without any regard to meeting his demands for repayment, we cannot as a society go on living way beyond our means and expect foreign bankers to go on supporting us. The plain fact of the matter is that we will only get their support as long as we can continue to improve the external trade situation and pursue domestic budgetary policies that will reduce further our reliance on external funding. As the Minister for Finance indicated in his budget speech, borrowing, especially foreign borrowing, has been reduced and the growth in public expenditure, which has been the core of our fiscal problems for a decade, has been curbed.

[1579] There are in practice two overriding issues which need to be given absolute priority if the economy in general and agriculture in particular is to recover from the very serious financial situation of the past four years.

The first of these priorities is to reduce inflation to a level that would ensure that we maintain competitiveness on export markets and that the incomes both of farmers and those in other occupations are at least maintained in real terms. After the favourable developments of the mid-seventies many sectors, and especially the agricultural sector, have seen a considerable fall in their income since early 1979. This has arisen from the ravages of inflation. In the case of farmers the prices they received for their products over the past four years have been eroded by the rapid increases in the prices they paid both for their production inputs and for the consumer products on which they spend their net family incomes.

Obviously in the face of such a situation the desired expansion of agricultural output is not attainable. The reduction of inflation is, therefore, a critical element of any policy measures which are taken to raise farm output. It is evident that, over the next few years at least, farm price improvements from the normal annual price fixing arrangements of the EEC will be restricted. In these circumstances the real prices of agricultural products received by farmers can be maintained only if the sharp downward trend in inflation over the past year is sustained. I might point out, a Leas-Cheann Comhairle, that as well as speaking about the proposed milk super-levy on Monday next we will also be having initial discussions on 1984 farm price proposals. Those price proposals do not make very happy reading but we could hardly expect otherwise when the financial situation in the community is so difficult. Nevertheless, we will be demanding an increase on the proposals which have been put before us. There are no increases at all proposed in some sectors such as milk and cereals and very minimal proposals in other areas. However, I am [1580] sure we will be supported by many other countries who also find the position unacceptable.

Policies to counter inflation are, however, not easy options. They can only be achieved if difficult and unpopular fiscal and monetary policies are pursued relentlessly. In this pursuit it is inevitable that all sectors, including agriculture itself, will have to bear the burden. This burden should not be more onerous on farmers than it is on other sectors, but they cannot escape it altogether.

The second priority in both our agricultural policy and economic policy generally must be that of improving the economic efficiency of production in Ireland. In the case of agriculture the contribution to the economy and the level of farm incomes enjoyed by farmers and their families are determined to a major extent by the level of efficiency achieved at farm level.

A major improvement in farm efficiency requires a deliberate and concentrated effort by the farmers themselves and by the Government agencies involved. In particular the focus must inevitably be on the programme and achievements of ACOT. It is essential that the advisory and educational work of ACOT be specifically orientated towards securing a substantial improvement in efficiency at farm level. This objective must be brought to the forefront of the policies pursued by farmers on their own farms. The aim of the business policies pursued by individual farmers must be to achieve higher net incomes through a more efficient use of the basic resources which are available. This would secure not only a better income for the farmer and his family but also a greater contribution by the agricultural sector to our national economy.

An improvement in efficiency will require in many cases the adoption of a suitable development plan. The adoption of such a plan will not in itself, however, automatically generate greater efficiency. It is the achievement of greater efficiency, where necessary through the adoption of a development plan. Which is of overriding importance. This primary objective should never be lost sight of in [1581] the policies pursued in the agricultural sector. Unless this objective can be realised the contribution of agriculture to the Irish economy will decline, the farm labour force will fall further and the return to the large investments made over the past decade will never be forthcoming.

If we are to overcome the economic problems that now confront us we must have an honest evaluation of the resources available for new developments. Long lists of demands which have no regard to the availability of resources are a positive handicap to generating the realistic development of our national economy. There are no difficulties in suggesting programmes and ways in which money can be spent. The need is to generate the vast amounts of resources required to finance these programmes. Our primary commitment to national development should be a commitment to generating additional resources, not to finding additional ways of dissipating what we have today.

The argument that we have to have large spending programmes in order to achieve worthwhile national growth is a fallacy. Unfortunately, that was the policy which was pursued from 1977 to 1981 with such disastrous results. If large-scale Exchequer expenditure were the way to increased national prosperity, we would not be in our present economic predicament. Digging holes and filling them up again was not a very clever economic policy. Indeed, given the scale of public expenditure over recent years we would have few economic problems left to resolve. But sadly that is not the case.

In the context of the very difficult financial situation facing the Government I am satisfied that the amount allocated this year for agriculture is reasonable. For some Departments the 1984 allocations are at or below the 1983 figure. Others show some increase on the 1983 figure. Agriculture falls into the latter group.

The gross allocation for 1984 at almost £370 million is 10 per cent higher than 1983 and the net allocation at £263 million is some 2 per cent above 1983. That seems to have been missed by Deputy [1582] Noonan. These figures reflect the fact that all schemes or aids aimed at increasing productivity and at mitigating the effects of the recession on the farming sector have been retained and adequately funded in 1984. In addition to the sums published in the Estimate, the Government as a budgetary measure are providing an extra £5.8 million for agriculture, £5.7 million of this is for the continuation of the AI and lime subsidy schemes to the end of this year. These schemes first came into operation in 1981 and have been instrumental in raising inseminations to their present annual level of over 1,300,000 and lime usage to over two million tonnes. Under existing EEC regulations the schemes are due to expire at the end of April but it is my intention to seek their extension. The continuation of the subsidies for those schemes comes up for consideration in the context of the discussions on prices in Brussels and we will be seeking their retention. I am hopeful that we will be successful. The artificial insemination scheme in particular has been one of the most successful schemes ever introduced here and we are particularly keen that it be retained.

The balance of £100,000 is being provided as aid for the potato industry. We are all aware of the difficulties facing the industry and clearly there is a need for improvement in the presentation and marketing of the product if we are to compete effectively with imports. The object of the aid is to encourage producers to rationalise the industry and in this regard moves are already afoot to establish a national potato co-operative. There have been major difficulties in the potato industry since 1980 when our status as a plant disease free zone was eliminated by a direction from the EEC and we now have to allow imports of potatoes. That has caused immense difficulties for our potato industry because the imported potatoes were better presented than the Irish products and our potato growers lost a sizeable proportion of the market. In 1982 the value of potatoes in processed or unprocessed form amounted to £25 million. I heard Deputy Noonan complaining about £100,000 being inadequate, but this is the first time any [1583] Government have made an attempt to put our potato industry on a sound footing. The protection our potato growers had up to 1980 is gone. In 1980 and 1981 Deputy Noonan's Government made no attempt to put our potato market on a sound footing. Therefore, I fail to see how he can complain about the inadequacy of a sum when his own Government did not even provide a penny.

There is much public disquiet at the level of potato imports and food imports generally. A figure of £750 million is often quoted as representing the current annual value of foodstuffs imported. I can go along with that figure but it is important to distinguish between food imports which might be considered absolutely necessary and those which could be substituted by home production.

It is of interest to examine the composition of the £750 million of imports to which I have referred. One hundred and fifty million pounds worth is accounted for by live animals, meat and meat preparations, £130 million by cereals and cereal preparations, £120 million by tea, coffee, sugar and sugar preparation, £110 million by feedingstuffs for animals and £90 million by fish, dairy, poultry and other products. The balance of £150 million relates to vegetable and fruit imports. Of the total of £750 million an analysis undertaken in my Department estimates that £200 million is substitutable by home production and £50 million of this latter sum would relate to vegetables and fruit.

The public have the erroneous impression that we import £750 million worth of fruit and vegetables and it is assumed that all this food could be produced at home but that is not the case. Only about £200 million could be produced here. I do not mean to be derisory when I say only £200 million could be grown at home because that is a vast amount of money and we must do everything possible to produce as much as possible of that food at home. Setting up the potato co-operative is a step in the right direction and perhaps steps will be taken to set up fruit and vegetables co-operatives to combat these imports. As I said, the bulk of these items [1584] cannot be produced at home. I know they have a beautiful climate in west Cork but they cannot grow bananas or oranges and that point is not taken into consideration. Of that £750 million, £550 million could not be produced at home and that point is often ignored or not understood.

I consider that there are reasons why imports of foodstuffs which might appear capable of substitution by home-produced goods have been taking place. Firstly, our agricultural industry is based to a very high degree on the output of livestock and livestock products and in consequence tillage and other crops are of less importance. The second factor is the seasonality of supplies from the Irish agricultural sector. This has tended to hinder the sustained development of a domestic processing sector as well as necessitating the importation of certain out-of-season fresh products. The third reason is the limited size of the Irish consumer market. That is a very important point which is very often ignored. It often happens that continental countries, like France, produce vast quantities of certain commodities and when they have an oversupply it suits them to sell that overproduction to Ireland and other countries at a very low price and that kills the indigenous industries. I am thinking particularly of the apple industry which has taken a terrible beating in the past ten years, largely because the French are producing a vast quantity of apples which they sell at dirt cheap prices. It is very difficult to prove a case of dumping in the European Court.

The size of the Irish consumer market has also tended to discourage the development of a comprehensive food processing sector here, leaving many areas of our consumer market to be supplied as an adjunct to the British market by British or multinational firms. Fourthly, is the reluctance of Irish food manufacturers, resulting to a considerable extent from the size of the home market, to develop new products to cater for changing consumer tastes and economic circumstances. Fifthly, is the high level in recent years of Irish production costs; and the final factor is the lack of overall strategy among producers, manufacturers [1585] and wholesalers for the regulation of supply and the marketing of their goods on the domestic market. It is only in the context of such strategy that supply contracts with the retail outlets, particularly supermarkets, can be won and competition from overseas suppliers overcome.

In considering the total foodstuffs imports of £750 million we must not lose sight of the fact that we are also a large exporter of foodstuffs. Our current exports exceed £1,500 million per annum. In other words, we export exactly twice as much food as we import. The bulk of the imports and exports are with other EEC countries. Our membership of the EEC involve us in a free trade situation and our food imports must be viewed in that context. We get this stupid argument from time to time that we should stop importing potatoes, apples and vegetables, but we cannot do that. We hear about the obstructionist tactics of the French and we are asked why we cannot adopt similar tactics. We are in a very vulnerable position within the EEC because we export twice as much food as we import. If we were to get involved in a dirty tricks campaign to stop food imports, retaliatory measures could be taken which could decimate our food industry. It is not a very clever idea for people who are net exporters of food to be tampering with food imports. The disgraceful episode we saw in Dundalk last year when potatoes were dumped overboard from an importing firm did not do any good for our name in Europe. We are too dependent on our exports to be fooling around like that.

Accordingly, unilateral action to limit foodstuffs imports would be impractical and indeed very unwise. Our ability to substitute for imports with home-produced products is clearly limited, but it would appear to me that there is great potential for increasing our exports of foodstuffs by specialising in those areas where we have a competitive advantage. The success of the Government in reducing inflation will be of benefit in this regard. Our overall interests might in the long run best be served by concentrating on maximising our exports of feedingstuffs [1586] particularly those which have been processed.

All of us have already heard and read a great deal about the current debate on the future of the EEC. That debate is an extremey wide one and goes far beyond the issues most frequently commented on in this country. In fact, it springs from the growing and deeply felt need to relaunch the Community, to give it a new impetus, a new dynamism and a place in the world commensurate with its real economic weight.

That was the spirit in which the Heads of State and Government looked at the Community's future when they met in Stuttgart last June. The outcome of that meeting was that the European Commission was asked to examine the problems facing the Community and to make such proposals as were deemed necessary. The Commission was to concentrate its work on certain specified areas. These were the review of existing policies including the Common Agricultural Policy, the development of new policies, the future financing of the Community, the accession of Spain and Portugal and the budgetary contributions of member states. As Minister for Agriculture, I am primarily concerned with two of these policy areas, namely, the review of the Common Agricultural Policy and the future financing of the Community. Needless to say, both of these problems are closely linked, since the operation of the Common Agricultural Policy is responsible for almost two-thirds of the entire spending of the Community.

That is an interesting point that often attracts people's imagination, or their ire, or whatever you wish. They ask: “Why do you spend so much time in Brussels discussing agriculture? What about other things like health, education, social welfare and industry?” The fact of the matter is that the Common Agricultural Policy is the only fully developed policy the Community has. We have a regional policy and a social policy, but they are not fully developed. They are not comprehensive. We spend so much time on agriculture because over two-thirds of all the money in the Community is spent on agriculture. So it is rather imperative that [1587] we make sure we get as much of that as we can. Hence the length of time we spend debating agriculture particularly at this time of the year when the price negotiations commence.

To deal with the financial problem first, it is true to say that for some time past the Community has been very preoccupied with its financial resources and the prospect of an inadequate budget in the fact of ever-increasing costs. That preoccupation or fear was justified as the recent deterioration in the Community's finances shows. The fact is that on the basis of current estimates the Community budget for 1984 will be insufficient to meet expenditure on the operation of existing policies, let alone the development of new policies or other unforeseen expenditure. The Community has, in effect, reached the limit of its current revenue resources. This is why the Commission has been obliged already this year to introduce certain unpalatable changes in the management of the Common Agricultural Policy in order to cut back expenditure and live within its budget.

It is clear then that the situation confronting the Community and its future financing is a very serious one, and it would be foolish to ignore that background in considering the future of the Common Agricultural Policy. I think this factor is too often overlooked or not fully appreciated. In fact, it is at the heart of the Community's problems. Indeed, if the Community is again to regain the momentum of economic development that it enjoyed in its formative years, it is vital that a satisfactory solution is found to its future financing. Because of the fundamental nature of the issues involved and their implications for the future of the Community and its member states, the current negotiations are the most complex and far-reaching ones for this country since we joined the Community 11 years ago.

The financing of the Community is rather complex and very often not fully understood. Some of the finance is obtained from customs duties, but the bulk of the finance is obtained from the [1588] revenue of 1 per cent of the proceeds of VAT in each member state. That source of revenue proved to be quite sufficient up to last year but, towards the end of 1983, the Community started to run out of money. The ceiling of the Community's income was reached and expenditure was beginning to outstrip income. That means there must be a restructuring of the Community's financing. In other words, the contributions to the Community's budget must be increased.

The proposal put forward by the Commission last July was that the proceeds from VAT should be increased from 1 per cent to 1.4 per cent. We welcomed that because we are a net beneficiary from the Community. The more money there is in it, the better it is for us. The Greeks went a little further than the Commission and proposed that the VAT contribution should be increased to 1.8 per cent. That was better still for us. By nature we are a very greedy nation and the more they provide the better we like it. When I say we are a very greedy nation I mean we are a very greedy race.

That increase has not been agreed upon because the net contributors to the Community budget have said they will not increase their contributions unless spending is brought under control, and specifically unless spending in the agricultural sector is brought under control, and more specifically still unless surpluses in the agricultural sector are eliminated or significantly reduced. Hence the proposed milk super-levy. The British and the Germans in particular who are the main net contributors to the Community's budget are adamant that they will not increase their contributions until such time as there is a restructuring of the Common Agricultural Policy, in other words, that the production of certain commodities is brought under very rigid control.

The general thrust of the Commission's proposals was to impose stricter controls on the Common Agricultural Policy and in particular to curb the growth of surplus production through a more restrictive market policy and through measures designed to reducing the cost of the Community's agricultural expenditure. In its [1589] report, the Commission recognised the importance of the Common Agricultural Policy to the development of the Community as well as the special characteristics of agriculture. It also stressed the need to adapt agricultural policy to the conditions which now prevail and to ensure the most efficient use of the available financial resources. It pointed out that the problem of over-production of certain products — notable milk and cereals — was of critical concern given the limited market outlets available and the burden which the disposal of surplus production places on the Community's budget.

I think that no one would quibble greatly with the Commission's general assessment of the difficulties confronting the Common Agricultural Policy. It has to be acknowledged that some changes of the policy are inevitable and that some sacrifices will have to be made to ensure its survival. It is certainly not in Ireland's interest that the future operation of the Common Agricultural Policy should be jeopardised by the chaos that could develop if the necessary measures are not taken to deal with the current problems. Our apporach to the debate then has been to ensure that the basic elements of the Common Agricultural Policy are preserved, that its principles are maintained, and that any measures to rationalise the policy or solve its problems are non-discriminatory, fair and equitable not only between member states and regions but also between different categories of farmers. This is where we take issue with some of the proposals put forward by the commission, and especially the proposed super-levy on milk.

Community milk production has been increasing rapidly and this has resulted in a massive build-up of stocks of butter and skim milk powder. There are now about a million tonnes of skim milk powder and some three quarters of a million tonnes of butter in intervention stocks. At the same time there has been a marked deterioration in the world market for these products, and there is no real commercial market available for much of them. The Community is thus faced with major problems in the disposal of its dairy [1590] stocks at the same time as it is faced with a critical financial situation. The Commission's proposals envisage a fundamental change in the operation of the system for milk by providing for the imposition of a super-levy on the production exceeding the 1981 level plus 1 per cent. This super-levy would work out at about 70p per gallon in Ireland. We accept that corrective action is needed to curb the growth in the Community's milk production, but as I have said any such action must be fair and just, and must take account of the level of development of the dairying industry in the different regions of Community. The super-levy would discriminate against our producers, would freeze our milk production, would impede or halt development in dairying and have extremely serious effects on our whole economy.

Agriculture is of major importance for our economic and social progress, not only for rural areas but for the entire country. In this country the milk industry is five times more important to the economy than in the Community generally and average milk yields here are some 20 per cent behind the EEC average. It was for these reasons that the Government have been strongly opposing the Commission super-levy proposal. I have been gratified by the recognition for Ireland's special position, expressed by many of our partners in the lead-up to the Athens Summit. However, the matter was not resolved at the Summit and we shall be having tough and difficult discussions on it in the coming months.

I now refer to the operation of the bovine TB eradication scheme. This scheme commenced almost 30 years ago and despite all the criticism it has been reasonably successful. When it started 17 per cent of cattle were affected by TB. The present incidence is 0.2 per cent, a very considerable reduction, and it is incorrect to say that the scheme has been a failure. However, I am not satisfied with the rate of progress in eliminating the disease. The level of eradication has barely decreased in recent years. Considering what we are spending such a massive amount of money, we cannot be satisfied with that. As announced [1591] recently, I am re-examining the whole strategy involved and I would hope that as a result we would come up with some new ideas to achieve a further decrease.

I have set a target of reducing the incidence amongst herds to less than 1 per cent in three years' time. The incidence in animals is 0.2 per cent but the incidence in herds is 2.6 per cent. I want to reduce the incidence from 2.6 per cent to less than 1 per cent. That is a reasonable goal and with the co-operation of everybody involved, farmers, veterinarians and the Department of Agriculture, we can achieve that target.

I would now like to deal with measures to encourage on-farm investment. In this regard the Government have provided the sum of £37.6 million to be expended in 1984 on the farm modernisation scheme, the western drainage scheme, the programme for western development and the EEC interest subsidy scheme.

The farm modernisation scheme which implements EEC Directive 72/159 on the modernisation of farms was introduced here in 1974. The scheme has provided a comprehensive framework of grant aid towards capital expenditure on farm development works. Since its inception over 105,000 farmers have participated in the scheme and over £255 million has been disbursed in grant aid.

Following the suspension of grant aid for buildings and fixed assets in February, 1983, a detailed reappraisal of the farm modernisation scheme was undertaken with the object of introducing revised guidelines to ensure that the scheme would operate in the most productive and efficient manner possible. Submissions were considered from many organisations connected with the Agriculture industry. In carrying out the review my Department were conscious of the criteria and conditions laid down in EEC directive 73/159 under which investment in farm development may be assisted. Accordingly any proposal for changes in the scheme outside the framework of Directive 72/159 could not be considered.

In considering the grant levels and scope of the revised scheme it has been necessary to try to balance the need for [1592] agricultural investment with the availability of Exchequer resources at a time of severe financial difficulty. Accordingly it is necessary to concentrate resources in the most essential forms of investment. The highest priority is the provision of suitable housing for livestock. As many as 2 million cattle are outwintered in Ireland. This results in a considerable reduction in the economic return from the national herd. In some cases also, outwintering causes severe damage to land through poaching — land which may well have been improved with the aid of Exchequer resources. In the circumstances the emphasis in the revised scheme is on basic livestock housing.

The principal feature of the revised scheme introduced on 3 January 1984 are:—

(a) The standard costings used to determine the level of investment to be grant-aided have been increased substantially.

(b) The range of structures and fixed assets eligible for grant-aid has been revised to put the main emphasis on livestock housing.

(c) The “Other-Low” category has been excluded because of the need to channel scarce resources into the most productive areas as well as the desirability of encouraging older farmers to hand over their farms to their heirs.

(d) In the case of commercial farmers aid will be by way of interest subsidy, equivalent to a grant rate of 15 per cent.

(e) For development and “Other High” farmers the rates of grant are being reduced by five percentage points in the case of farm buildings and an average of about fifteen percentage points in the case of land improvements.

Certain elements of the farm modernisation scheme which were discontinued last year are not being reintroduced. These are grants for mobile equipment, guidance premiums, grants for keeping farm accounts, and the group fodder scheme. Grants for tourists and craft projects and for incremental livestock are also being eliminated.

[1593]Mr. H. Byrne:What percentage of farmers will be eligible for the new scheme?

Minister of State at the Department of Agriculture (Mr. Connaughton):Most of them.

Mr. Kitt:That is not an answer.

Mr. Deasy:If Deputies are willing to come to Question Time next week, we will be willing to give some answers. I remember that they ran away the last time.

Mr. H. Byrne:The Minister will not be afraid to come in.

Mr. Deasy:I never am. I love it. I take to it like a duck to water. I like keeping Deputies in suspense.

Mr. H. Byrne:The Minister is keeping agriculture in suspense. It is a disastrous scheme. It is not a modernisation scheme.

Mr. Deasy:We had the highest rate of increase in Europe in 1983, according to official EEC statistics.

Mr. H. Byrne:What percentage of farmers will be eligible for the scheme?

Mr. Deasy:We are endeavouring to rehouse as many livestock as possible. I suggest that Deputy Byrne should go back to New Ross and do something to rehouse the Jehovah Witnesses whom he tried to hunt out a few months ago, whatever about the Moonies. I enjoy myself too much in these agriculture debates.